Attorney Fees in 13 Plan

[redyhws]

(1) Assuming you are going to use your DMI as your proposed monthly payment amount, do you have to add your attorney fees and trustee fees to your monthly payment or do they just come out of the computed DMI? They are considered "unsecured creditors", and hence the DMI should be sufficient, right?

(2) Also, assume you owe your attorney $2,000 (which he has agreed to roll into the Chapt. 13 plan), and say you pay $600/month to plan. Assuming the trustee gets paid 10%, does that mean that the $2000 to the attorney will be paid in the first 3 - 4 monthly payments to the trustee because 90% of the monthly payment will first be allocated to the attorney fees (not 100% because 10% goes to trustee I presume) before any other creditor gets paid by the trustee?

(3) If "adequate monthly protection payments" is required to car lenders (to prevent decreased car value during the pendency of the plan confirmation), is such amount first deducted from the monthly payment before the attorney gets paid? Just trying to understand the "priority of payments" a little better.

[HHM]

1. Correct, your attorney fee and trustee fee usually come off the top of your DMI. Where this can become a problem is if your plan is mostly designed to pay back priority claims and/or secured debt arrears (mortgage arrears). Your attorney's fee basically comes from amount available to "unsecured" creditors. If your plan is paying very little to unsecured, then you would need to increase your DMI in order to pay your attorney (in this scenario, most attorneys will require the bulk of their fees to be paid up front and not roll them into the plan, because putting the fee into the plan would require a higher DMI that you might not be able to afford).

2. I don't recall exactly how that works, but yes, your attorney is paid first, but I do not recall if the trustee takes his 10% during this time (probably, but not sure). Actually, how this typically works is the trustee will simply hold the funds (that is, not disperse them) until the full amount due the attorney can be paid in one lump sum.

3. It will depend on how your attorney structures the plan. But, if the plan calls for adequate protection, those payments will typically start from the beginning of the plan. (but when the AP payments begin is subject to negotiation).

Ultimately, questions 2 and 3 really don't matter as far as the debtor is concerned. As long as you make your payment each month, the how, who, and order of payment really doesn't matter (to you, anyway).

[redyhws]

I agree it doesn't matter to me when and how payments are made to the attorney or creditors. This is what my attorney told me, and I just want to confirm that he knows what he is talking about and not charging me "additional monthly payment amounts" that are unnecessary.